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Form 8990: Limitation on Business Interest Expense Under Section 163(j)
IRS Form 8990 is used to calculate the deductible amount of business interest expense and any portion that must be carried forward. The deduction is limited to the sum of business interest income, the applicable percentage of adjusted taxable income, and floor‑plan financing interest expense.
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IRS Form 8990 - Limitation on Business Interest Expense Under Section 163(j)
IRS Form 8990 is used to calculate the deductible amount of business interest expense and any portion that must be carried forward. The deduction is limited to the sum of business interest income, the applicable percentage of adjusted taxable income, and floor‑plan financing interest expense.
Risk Radar
Scan points- 1Omitting Form 8990 when required disallows the business interest deduction.
- 2Failing to file Form 8990 when the taxpayer is not exempted from the filing requirement.
- 3Omitting Schedule A for a partnership before completing Part I.
- 4Omitting Schedule B for an S corporation before completing Part I.
- 5Submitting Schedules A or B when a safe‑harbor election has been made.
Plain English
Form 8990 tells you how much of your business interest you can deduct this year and what you must carry over to the next year. It adds up your interest income, a share of your adjusted taxable income, and any floor‑plan financing interest. If you have an exception, you may not need to file.
Submission Date
- Filing date: 2026-01-21 17:10:36
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when a taxpayer has business interest expense, a disallowed business interest expense carryforward, or current or prior year excess business interest expense.
- Do not use this form when the taxpayer qualifies for an exclusion from filing as described in the instructions.
- Check Form 5471 instead when the filing pertains to a foreign entity information return that also requires reporting of business interest expense.
Form selector
Use this form or another form?
Partnership subject to section 163(j) limitation
Partnership must compute the limitation at the partnership level, not at partner level
✓ Verify partnership applies the limitation per regulations
Regulated investment company (RIC) paying section 163(j) interest dividends
RIC must report the business interest limitation on Form 8990
✓ Confirm RIC status and dividend payments
Foreign CFC group member requiring an information return
Business‑interest information is attached to the foreign entity return rather than filed on Form 8990 alone
✓ Ensure Form 5471 is attached to the tax return
Deadline or filing window
Not stated in the official source.
Checklist
What you need before filling it out
Business interest expense deduction
Computation of limitation lines · Form 8990, lines for business interest income, ATI percentage, floor‑plan interest
Disallowed business interest carryforward
Prior‑year carryforward amount · Form 8990 line 2
Asset‑basis allocation statement
Statement of asset basis and allocation · Attached statement per Reg. §1.163(j)-10(c)(6)(iii)
Safe harbor election for REITs
Election election statement · Regulations §1.163(j)-9(h)
Foreign CFC identification
Name and EIN of foreign entity, Reference ID · Form 8990 fields A‑D for foreign entity
Before you submit
- 1Verify the revision date on the top of Form 8990 reads December 2025
- 2Enter the taxpayer’s name and identification number accurately
- 3Calculate adjusted taxable income and apply the applicable percentage
- 4Report business interest income, expense, and floor‑plan financing interest on the appropriate lines
- 5Enter any disallowed business interest carryforward on line 2 if applicable
- 6Attach the required asset‑basis allocation statement to the tax return
- 7Check the appropriate box if the form relates to a foreign CFC or group
How to file this form
- 1Calculate adjusted taxable income and the applicable percentage
- 2Complete the business interest income, expense, and floor‑plan financing lines on Form 8990
- 3Enter any disallowed business interest carryforward on line 2
- 4Attach the asset‑basis allocation statement as required by regulations
- 5Sign the form if a signature line is present
- 6Attach Form 8990 to the timely filed tax return
- 7Retain a copy of the completed form and attachment for records
Known limitations
- 1Taxpayers with interest expense only from providing services as an employee are not required to file Form 8990.
- 2Taxpayers with interest expense only from an electing real property trade or business are not required to file Form 8990.
- 3Taxpayers with interest expense only from an electing farming business are not required to file Form 8990.
- 4Taxpayers with interest expense only from certain regulated utility businesses are not required to file Form 8990.
Field map
Compact field-by-field guide
Entity Info
1 items
Name and taxpayer ID of the entity claiming the credit.
Credit Info
1 items
Type of credit or incentive being claimed.
Calculation
2 items
The base amount used to calculate the credit.
Calculated credit amount after applying formulas and limitations.
Certification
1 items
Detailed breakdown supporting the credit calculation.
Signatures
1 items
Sign and date the form.
Almost done reviewing the fields?
Fillable formOpen in Editor->Form 8990 (Rev. December 2025) is the current edition; the instructions direct users to www.irs.gov/Form8990 for the latest information. The new rule adds an add‑back for depreciation, amortization, or depletion to ATI for tax years beginning after 2024.
What changed or needs a fresh check
- Edition date — confirm the form shows Rev. December 2025
- Fee — Not stated in the official source
- Mailing address — Not stated in the official source
- Signature — Not stated in the official source
Quick Facts
Downloads
After you file
- 1Retain the signed Form 8990 and all supporting calculations in your tax file for at least seven years
- 2Keep copies of the worksheets used to compute adjusted taxable income and the interest limitation for future reference
- 3When filed electronically, note the acceptance confirmation number provided by the IRS e‑file system as proof of receipt
- 4If the IRS issues a notice of error, submit an amended Form 8990 with corrected figures using the appropriate amendment procedure for your tax return
Sources
- SRCInstructions p.1 — taxpayers with interest expense only from providing services as an employee are exempt from filing Form 8990.
- SRCInstructions p.1 — taxpayers with interest expense only from an electing real property trade or business are exempt from filing Form 8990.
- SRCInstructions p.1 — taxpayers with interest expense only from an electing farming business are exempt from filing Form 8990.
- SRCInstructions p.1 — taxpayers with interest expense only from certain regulated utility businesses are exempt from filing Form 8990.
- SRCInstructions p.1 — a pass‑through entity allocating excess taxable income or excess business interest income to owners must file Form 8990 regardless of interest expense.
- SRCInstructions p.6 — a trading partnership must bifurcate its interest expense between materially participating and non‑participating partners.
- SRCInstructions p.7 — do not complete Schedule A or Schedule B of the CFC group’s Form 8990.
- SRCInstructions p.1 — the purpose of Form 8990 is to figure the deductible amount of business interest expense and the amount to carry forward.
Common confusion points
Do I need to file Form 8990 if I only have interest expense from providing services as an employee?
The source lists employee services as an excepted trade, which removes the filing requirement.
→ Confirm that all interest expense falls exclusively within that employee‑service category.
Is an electing real property trade or business exempt from filing Form 8990?
The source identifies electing real property trades as an exception from filing.
→ Verify the election status and ensure no other non‑excepted interest expense exists.
Are electing farming businesses required to file Form 8990?
The source states electing farming businesses are an excepted trade.
→ Check that your farming activity has made the election and that interest expense is limited to that trade.
Do regulated utility businesses have to file Form 8990?
The source includes certain regulated utility businesses among the filing exceptions.
→ Determine whether your utility falls within the listed regulated categories.
Must a pass‑through entity file Form 8990 even with no interest expense?
The source requires any pass‑through allocating excess taxable or interest income to owners to file regardless of interest expense.
→ Confirm that you are allocating excess taxable income or excess business interest income to owners.
How should a trading partnership handle its interest expense on Form 8990?
The source mandates bifurcating interest expense between materially participating and non‑participating partners.
→ Ensure the bifurcation is performed and only the material‑participation portion is limited under section 163(j).
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- Form 1040X – individuals amend their return and include a corrected Form 8990 when the IRS notifies a filing error
Questions about IRS Form 8990
What is IRS Form 8990 used for?
Form 8990 tells you how much of your business interest you can deduct this year and what you must carry over to the next year. It adds up your interest income, a share of your adjusted taxable income, and any floor‑plan financing interest. If you have an exception, you may not need to file.
Who must file IRS Form 8990?
Taxpayers with business interest expense that is not limited to the excepted trades or businesses must file IRS Form 8990.
What information does IRS Form 8990 require?
The form gathers the amount of business interest expense, calculates the allowable deduction in Part I, and reports any disallowed portion to be carried forward on line 31. Partnerships complete Schedule A before Part I, and S corporations complete Schedule B before Part I.
How do I complete IRS Form 8990?
First, determine whether a safe‑harbor election applies; if so, check the “Yes” box on line D and attach Worksheet C. Complete Part I to compute the allowable business interest expense. Partnerships must fill out Schedule A before Part I, and S corporations must fill out Schedule B before Part I. Carry the amount on line 31 to the next year’s Form 8990 (or to Part II line 32 for partnerships).
Do I need to file Form 8990 if I only have interest expense from providing services as an employee?
The source lists employee services as an excepted trade, which removes the filing requirement. Confirm that all interest expense falls exclusively within that employee‑service category.
Is an electing real property trade or business exempt from filing Form 8990?
The source identifies electing real property trades as an exception from filing. Verify the election status and ensure no other non‑excepted interest expense exists.
Are electing farming businesses required to file Form 8990?
The source states electing farming businesses are an excepted trade. Check that your farming activity has made the election and that interest expense is limited to that trade.
Do regulated utility businesses have to file Form 8990?
The source includes certain regulated utility businesses among the filing exceptions. Determine whether your utility falls within the listed regulated categories.
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